Googled, End of the World As We Know It, Ken Auletta, book, Toby Elwin, blog

Googled: the cost of culture

What does culture really costs a company? Is it worth investing in culture or passively letting culture form, also known as luck-based leadership? What is the cost of culture, in profit or loss?

I found this one company a great example:

Maternity leave: 5 months full salary
Paternity leave: 7 weeks full salary Plus new moms and dads are able to expense up to $500 for take-out meals during the first four weeks that they are home with their new baby.

Free meals, free snacks, free physicians (on site), free medical care (on site), massage (on site), gyms (on site), trainers (on site).

On-site hair cutting, car wash, oil change, day care, dog care, and dental care.

And what does this cost? Well, the percentage of revenue these perks cost the company each year starting in 2005 are as follows:

2005 1.15%
2006 0.66%
2007 0.42%
2008 0.32%
2009 0.30%

Adding more benefits, assuming more costs, not cutting costs? Well, what did this do to their revenue growth? From 2001 the company I’m talking about grew revenues 28,517.27% by 2009 and from 2001 grew net profits 94,302.90% by 2009.

Further, the company gives people the freedom to take 1 day a week, 20% of their time, to dedicate themselves to projects they feel passionate about.

Though cutting many fringe office expense and cutting staff might halt short-term costs, what does it cost the culture and the motivation of those lucky enough to remain. Clearly, from this one example adding and expanding costs. If you rely on people, and that should not be open for debate, then the culture you build becomes the culture that motivates.

Showing up to work and getting paid does not infer innovation, collaboration, communication, and output.

Hearkening back to Herzberg’s motivation theories of:

  • achievement,
  • recognition,
  • the work itself,
  • responsibility,
  • advancement, and growth fuel motivation.

What has this company done to enable these?

Now layer Maslow’s Hierarchy of Needs on top of Herzberg’s Motivation-Hygiene Theory with a view above basic physiological needs and safety and security needs, and revisit with a view of how companies enable:

  • love and belonging — friendship, family, intimacy, sense of connection;
  • self-esteem — confidence, achievement, respect of others, the need to be a unique individual;
  • self-actualization — morality, creativity, spontaneity, acceptance, experience purpose, meaning and inner potential

Investing in, not cutting, human capital can be highly profitable, and that’s a real return to an investment in culture.

To find out more about this company, just Google…Google

Googled: The End of the World As We Know It, by Ken Auletta telwin amajorc

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Comments 2

  1. Toby, this is a great posting. We find that focusing on developing “inspirational cultures” has many of the benefits you mention. The culture can also be enhanced to inspire any number of outcomes such as customer-focus, innovation, lean and productive, environmentally friendly, top quality, etc.

    Keep up the great blogging.

  2. Focus on inspiration and the way things are working is the humanistic business process reengineering and a strong alternative to the scientific autopsy of process “in-the-wrong”.

    No person or group likes to be audited for their failure. Where it is working or where it “could be” is a more value-oriented change approach important to humans and to the elemental findings of systems theory.

    Do we avoid the humanistic for fear of emotional engagement? Is the scientific/engineering lens safer? I know you support return to people, I value the way you integrate appreciative inquiry into all you do. All systems could improve with this alternative. Let’s engage!

    Thanks for your continued support and kind words.

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